"At recent meetings, the Board had judged that leaving the cash rate unchanged was appropriate while continuing to gauge the effects of the substantial degree of monetary policy stimulus that had already been put in place"
- RBA minutes
It seems that the AUD/USD currency pair has found a strong support level around 0.89, as the pair is refusing to go any lower. Moreover, the Aussie emerged and moved around the flat line around the lowest level since late August, as the RBA minutes showed the central bank remains in "wait-and-see" mode. During the December meeting the RBA left the overnight cash-rate at 2.5%. Glenn Stevens reiterated his concern over the strong Aussie, and stressed that a weaker currency is needed to achieve balanced growth in the domestic economy. Nonetheless, some of economic indicators are showing promising sings, while some of them are still lagging behind. Despite coming down almost 17% this year, the Aussie is still considered to be at a "uncomfortably high" level, and Australian policymakers are not closing off the possibility of further rate cuts.
While the RBA minutes did not offered any surprises, Treasurer Joe Hockey said Oz budget deficit will balloon up to $47 billion this fiscal year as spending cuts are weighed by an elevated currency and waning mining investment. This figure is almost $17 bigger than the initial estimate posted in the government's mid-year economic forecast. At the time being, the Australian economy is expected to grow by 2.5% this fiscal year, compared with 3% seen four months ago.
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